Bank of Baroda, which posted a net loss of Rs1,046.5 crore for the quarter ended March 2021 from a profit in the year-ago period, is planning to raise Rs 5,000 crore from sales of shares and bonds.
While Rs 2,000 crore will be from sales of shares, up to Rs 3,000 crore will be via bonds that qualify as capital.
In March, the state-run bank had raised Rs 4,500 crore from institutional investors to strengthen its capital ratios at a time when the coronavirus pandemic has damaged the Indian economy. The gross bad loan ratio of the bank stood at 8.87% at the end of March from 8.48% a quarter ago.
The bank’s provision for bad loans rose 44% year-on-year to Rs 4,593 crore in the quarter under review. The net NPA ratio was at 3.09%, up from 2.39% a quarter ago.
A steep rise in tax expense to Rs 3,726.07 crore versus a tax write-back of Rs 2,229.85 crore in the year-earlier period impacted the bank’s bottomline.
The bank’s net interest income, the difference between interest earned and interest expended, grew 4.5% year-on-year to Rs 7,106.62 crore in March quarter. Non-interest income (other income) surged 71% toRs 4,848.39 crore.
Pre-provision operating profit grew 27.3 % YoY to Rs 6,265.6 crore for the quarter ended March 2021. Net interest income (NII) rose 4.95% to Rs 28,809 crore. Net interest margin declined to 2.73% from 2.76% a year ago.
“Given the fact that we had a profit before tax of Rs 5,556 crore (in FY21), we thought this is the right time to transit to a lower tax rate regime. But the movement to the new tax regime means we have to make a DTA (deferred tax assets) adjustment, which was of the order of Rs 3,500 crore for the full year. Because of that, we are reporting an accounting loss of around Rs 1,000 crore in Q4 FY21,” Bank of Baroda managing director and CEO Sanjiv Chadha told reporters after announcing the quarter results on 29 May.
“But for the DTA impact, we would have had a profit after tax of Rs 2,200 crore in the last quarter,” Chadha added.
Advances grew at 1.83% YoY to Rs 7.51 lakh crore. The retail loan portfolio grew 14.4% YoY to Rs 1.2 lakh crore.
Deposits rose 2.2 % to Rs 9.66 lakh crore. Domestic current account savings account (CASA) rose 16% YoY to Rs 3.68 lakh crore.
Gross non-performing assets (NPA) as a percentage of gross advances was at 8.9% and net NPA as a percentage of net advances fell to 3.1 % at the end of the fourth quarter. In the preceding quarter, the proforma gross NPA was at 9.63% and net NPA was at 3.36 %.
Though the bank is still to assess the impact of the second wave of Covid-19, the management said that most of its corporate accounts are restructured. “Given the fact that 50% our book is corporate, it is the performance of the corporate loans which will define the overall impact on the bank," Chadha said, adding that, as was the case with the first wave, the impact is going to be more as far as retail is concerned and significantly more for MSMEs.
Bank of Baroda said the slippages ratio declined to 2.71% as of FY21, against 2.97% in FY20, and the credit cost ratio also fell significantly to 1.68% from 2.35%.
